AFRICAN Export-Import Bank (Afreximbank) has pledged to continue assisting Zimbabwe meet its financial needs, saying all the loans extended to local entities by the bank have performed to expectation, an official has said.
Afreximbank director and global head of advisory and capital markets, Ibrahim Sagna, last week told delegates attending the Institute of Chattered Secretaries and Administrators (ICSAZ) Capital-Raising Conference in Harare that the bank had extended various facilities to Zimbabwean entities over the difficult period to respond to the challenging macroeconomic environment and attendant funding bottlenecks.
“We wish to continue meeting Zimbabwe’s financing needs. Afreximbank has historically been a partner to Zimbabwe and is committed to assisting the country in making further progress and assist in its efforts to achieve progress and development. The bank sees itself as one of the most committed partners amongst multilateral financial institutions,” he said.
“Afreximbank has extended to Zimbabwean entities various facilities over the difficult period with cumulative disbursements in excess of US$5 billion. The facilities were designed in such a way as to respond to the challenging macro-economic environment and bottlenecks to facilitate business for Zimbabwean corporates. This was facilitated via a specifically tailored country programme with objectives as follows: Providing short-term financing to Zimbabwe for meeting critical food and energy imports. Seeking to close the gap of foreign exchange requirements for meeting Zimbabwe’s import needs given the high intra-regional content of its total trade.”
To date, the bank says cumulative disbursements are now in excess of US$5 billion. The Reserve Bank of Zimbabwe has negotiated several lines of credit with Afreximbank and the bank recently revealed it had secured a loan facility to guarantee the 1:1 convertibility value of Real-Time Gross Settlement (RTGS) balances into the United States dollar and availability of the greenback for nostro foreign currency accounts.
Sagna said the bank also stepped in on the issuance of debt capital market instruments to tap into diaspora remittances and on providing medium-term financing in support of the revival of a select number of small and medium enterprises (SMEs), especially in agriculture and manufacturing.
Afreximbank also assisted in the issuance of investment-grade debt paper for trading in the interbank secondary market, a move that provided a liquidity support window for Zimbabwean banks.
However, he said Zimbabwean businesses—as is the case with other countries—faced a number of challenges. He listed a raft of measures that needed to be adopted for businesses to attract investment. To transform the region into a dynamic global hub for business, investment and innovation, there was need for fast-track economic development by enabling private-sector growth where a true one-stop shop for potential and current investors was a must.
Sagna said the funded projects should not be politically driven, but rather should be drivers of the economy and regional integration through inclusion of the projects in the net domestic product.
“The actual hurdle is ‘bankability’, and the challenge that investors face in identifying and structuring bankable projects.The second set of challenges relates to government aptitude.
“In most cases, they own the jurisdiction and the asset, so they need to guide the regulations and concessions, as well as kick-start the agreement. All too often, political agendas create hurdles for transactions. There is a third challenge, which is lack of technical expertise. The critical mass of consultants, project managers, legal advisers, skilled staff and other service providers is sorely lacking across Africa,” he said.
Meanwhile, Sagna said Afreximbank has so far approved facilities totalling US$15 billion for the benefit of three central banks in Africa with utilisations amounting to US$10,55 billion under the Central Bank Deposit/Investment Programme (CENDEP).
The programme is designed to mobilise part of the foreign reserves of African central banks to fund viable trade programmes and projects in Africa while providing favourable returns on deposits.